May 14, 2013
In any profession, the good ones always seem to go the extra mile. Sometimes, however, those long distance runners may turn out to be Rosie Ruiz. It ain't nice to take short-cuts. Consider this recent regulatory case.
A Natural Born Stock-Man
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, David E. Stockman submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of David E. Stockman, Respondent (AWC 2012033507601, May 9, 2013).
Between July 1999 and August 2012, David Stockman ("Stockman") was registered with FINRA member firm Merrill Lynch, Pierce Fenner & Smith, Inc. The AWC asserts that he had no prior formal disciplinary history.
The AWC alleges that between approximately December 2011 and June 2012, Stockman sent articles representing his own research and commentary to Merrill Lynch customers. Okay, so, in and of itself that doesn't seem like a big deal, much less anything even remotely resembling a regulatory violation. If that were all that had happened, well, you would be correct; except, you know, BrokeAndBroker doesn't generally publish feel-good stories about things that go according to plan.
The AWC alleged that rather than do the searches and crunch the numbers for his own original research reports, Stockman had copied previously published articles that addressed economic and financial issues, and proceeded to foist them upon his unsuspecting customers as his own gems of brilliance. A bit of plagiarism, as it were.
The AWC further alleges that before he mailed the literature to his customers, Stockman had not submitted the articles to Merrill Lynch for the firm's prior review or approval. Additionally, the AWC asserts that Stockman knew that Merrill Lynch would not have approved the mailing of any of the articles to customers because the content was contrary to the firm's research. Banging the last nail into this regulatory coffin, the AWC asserts that when confronted by Merrill Lynch, Stockman denied his misconduct -- that is, until the firm presented Stockman with copies of the original articles. Ouch!
FINRA deemed the above conduct to constitute a violation of FINRA Rule 2010, and in accordance with the terms of the AWC, the regulator imposed upon Stockman a $5,000 deferred fine and a four-month suspension in all capacities from association with any FINRA member firm.